Concurrent audit in banks is a continuous examination of transactions and controls at branches and departments, supplementing statutory central audit. The Reserve Bank of India prescribes scope through master directions and annual guidance to banks.
Chartered accountants appointed as concurrent auditors report monthly to management and audit committees on exceptions, revenue leakage, and compliance gaps. Quality of reporting directly supports risk management.
This article summarises scope, focus areas, and reporting expectations.
Objectives of concurrent audit
- Early detection of irregularities in high-risk areas (advances, forex, treasury).
- Verification of adherence to KYC/AML guidelines and RBI circulars.
- Assessment of internal control effectiveness at branch level.
- Feedback for remediation before statutory audit and RBI inspection.
Typical scope areas
Deposits and CASA
Account opening documentation, nominee details, dormant account activation, and interest application checks.
Advances and NPA
Sanction terms vs disbursement, security creation, renewal documentation, income recognition, and SMA/NPA classification timelines.
Foreign exchange and trade finance
FEMA compliance, bill lodgement, ORM/IRM reporting, and authorised dealer limits.
Cash, clearing and digital channels
Vault custody, ATM reconciliation, UPI/chargeback monitoring, and cyber incident logging.
Monthly reporting format
Banks issue branch-wise checklists and severity grading (critical / major / minor). Auditors submit:
- Summary of irregularities with amounts at risk.
- Root cause and suggested corrective action.
- Follow-up on prior month pending points.
- Certification of coverage of mandatory transactions sample.
Risk-based sampling
| Area | Higher sample when |
|---|---|
| High-value advances | New sanctions, restructuring, or SMA status |
| Forex | Spike in remittances or new corporate customers |
| Gold loans | Valuation disputes or rapid growth |
Auditor independence and rotation
RBI norms address tenure, network firm restrictions, and non-audit services. Concurrent auditors must maintain working papers for review by statutory central auditors and RBI inspection teams.
General professional information only. Bank-specific concurrent audit policies prevail; refer to latest RBI master directions.